CHARLESTON, W.Va. — Legislators in Charleston for December legislative interim meetings received disturbing news from the state Revenue secretary: Next session, they will be dealing with a 2017-18 state budget shortfall expected to exceed $400 million.
“I’m not uncomfortable saying north of $400 million,” Revenue Secretary Bob Kiss told the Joint Committee on Finance, when asked to project the size of the coming budget deficit.
Kiss said there is a “significant structural hole” in the state’s financial picture, which extends out through the length of the state’s six-year budget forecast.
“The real challenge here, if you’re going to solve the problem, which is a structural hole in the budget, you can’t do it with across-the-board cuts,” Kiss told legislators.
Gov. Earl Ray Tomblin has cut state spending by more than $400 million over the past three years with a series of across-the-board cuts, including a 2 percent mid-year cut ordered last month.
Kiss said Tomblin believes additional across-the-board cuts would require layoffs and elimination of services.
It wasn’t the only bad financial news legislators received during the interim meetings.
A week after the Public Employees Insurance Agency Finance Board approved some $50 million of benefits cuts next year for public employees and retirees covered by the health insurance plan, PEIA executive director Ted Cheatham told legislators benefit cuts of that magnitude could become the norm each year.
“We’re going to need $50 (million) to $60 million a year, every year, of new funding,” he said of avoiding future cuts in benefits.
He said that’s simply a factor of operating a health insurance plan that pays out nearly $1 billion a year in health care claims, while medical and prescription drug costs are increasing at a rate of about 6 percent a year.
Meanwhile, he warned that Medicare retirees could see their PEIA premiums go up about 28 percent a year beginning in 2019, as caps on a fund used to offset those premiums take effect.
Also during December legislative interim meetings:
— Despite years of trying, the state still can’t get a handle on how many motor vehicles it owns, a legislative audit concluded.
The Fleet Management Office says it has 7,648 passenger vehicles, while the Division of Motor Vehicles shows state license plates issued for 10,504 vehicles, and the state Board of Risk and Insurance Management indicates it is insuring a fleet of 12,609 vehicles.
“There is still no single source which can accurately and fully account for the total number of vehicles in the state’s fleet,” the audit concluded.
In 2010, the Legislature created the Fleet Management Office to oversee the state’s vehicle fleet, but the audit found 37 state agencies, including all colleges and universities, that are exempt from fleet management requirements.
— Department of Transportation officials said they are ordering Division of Highways engineers to disclose if they have outside employment moonlighting for private-sector companies.
That’s in light of an ongoing federal corruption probe that to date has resulted in the arrests of two former Highways engineers, a highway contracting business executive and a Marshall professor charged in a kick-back scheme to direct $1.5 million of Highways projects to a South Carolina engineering consulting firm.
“If they do not submit the form, and we learn that they are engaging in secondary employment, the odds are very high they will be terminated,” Highways general counsel Michael Folio told legislators. “We’re taking this very seriously.”
— Legislators held closed-door party caucuses to nominate their leaders for the 2017-18 Legislature.
In the Senate, Republicans nominated current Majority Leader Mitch Carmichael, R-Jackson, for Senate president. He will replace current President Bill Cole, R-Mercer, who gave up his Senate seat to make an unsuccessful run for governor.
In the House, Republicans nominated Speaker Tim Armstead, R-Kanawha, for a second term as speaker, while House Democrats renominated Minority Leader Tim Miley, D-Harrison, as minority leader.
Senate Democrats nominated Sen. Roman Prezioso, D-Marion, formerly the Senate Finance Committee chairman before Republicans gained a majority in the Senate in 2014, as their minority leader.
Prezioso will succeed Minority Leader Jeff Kessler, D-Marshall, who also gave up his Senate seat in an unsuccessful bid for governor.
The speaker and the president will be formally elected by the full House and Senate when the 2017 legislative session convenes on Jan. 11.
Phil Kabler is a Statehouse reporter/columnist for The Charleston Gazette and a contributing columnist to the West Virginia Press Association. He can be followed on Twitter at @PhilKabler.